City Living: Why Real Estate Matters

Virginia Postrel offers an intriguing take on city-living and the cost of housing here. (Get there fast. Not sure how long the link will be active.) A sample:

Dallas and Los Angeles represent two distinct models for successful American cities, which both reflect and reinforce different cultural and political attitudes. One model fosters a family-oriented, middle-class lifestyle—the proverbial home-centered “balanced life.” The other rewards highly productive, work-driven people with a yen for stimulating public activities, for arts venues, world-class universities, luxury shopping, restaurants that aren’t kid-friendly. One makes room for a wide range of incomes, offering most working people a comfortable life. The other, over time, becomes an enclave for the rich. Since day-to-day experience shapes people’s sense of what is typical and normal, these differences in turn lead to contrasting perceptions of economic and social reality. It’s easy to believe the middle class is vanishing when you live in Los Angeles, much harder in Dallas. These differences also reinforce different norms and values—different ideas of what it means to live a good life. Real estate may be as important as religion in explaining the infamous gap between red and blue states.

Which of these is Pittsburgh? Seems like a bit of a mix. Maybe one trying to become the other?

Comments

[Paul]

Depends by what you mean by Pittsburgh with your question. If you mean the city proper I'd argue that neither description fits. I'd argue that Pittsburgh the city is one of stark contradictions... one where high income very expensive homes, condos and apartment (Squirrel Hill and Shadyside) occupied by trust babies or elderly who had opportunity to save and invest are literally separated by a single street from extreme poverty, violence and all the markings of a ghetto (Homewood and East Liberty) and both elements move constantly to their extremes. There is no hint of what I would define as middle class or balance family living with in the city borders nor any signs of the reward for highly productive work described.

If you mean Pittsburgh metro or Pittsburgh and the very near by suburbs it's a lot fuzzier.

[Jonathan Potts]

Paul,

If you really believe what you wrote, then I'd submit that you have never spent much time in the city, and certainly little time outside the East End. (Even some of your descriptions of those neighborhoods is questionable.)

It's debatable whether anyone should even bother to respond to your comments at this point. Clearly you are not interested in having a reasonable discussion.

[Ed Heath]

Pittsburgh may be neither, since our population is declining. I don't know if houses stay on the market a long time or not, my sense is that in marginal neighborhoods they do or are simply abandoned. In some of the seedier neighborhoods some houses simply can’t be sold, I would suspect, and in some parts of Point Breeze, I would guess the mansions might be pretty cheap (no accident Construction Junction is over there?).
It is true that it is not as easy to build in the city proper, although I would expect there is a reasonable supply of houses to buy as people die or move away. And there are a couple of developments in the city, even besides the silliness of downtown. But there seem to be a considerable number of developments to the north, south and west, and to a lesser extent to the east.
I think if the city, county and state can get their tax situations under control, and people can get over their prejudices about the area (i.e. high labor costs and pollution), Pittsburgh could take off in service and manufacturing. We have cheap living, relatively short commutes, a good position relative to Chicago, DC and New York, an under utilized airport, a lot of students, etc etc.
I agree with Jonathan about Paul. At the very least Squirrel Hill, Shadyside, Greenfield, Bloomfield and Friendship have some University employees (middle class) and some students (they're not all in Oakland). Trust babies? And what about the Southside? West Hills? Spring Garden? News to them about being millionaires or living in abject poverty, although many of us are elderly statistically (sorry Jonathan, I guess I did respond to his comments).

[Sam M]

I consider my neighborhood (Friendship/Bloomfield) pretty middle class. Sure, it has gentrified a bit, and there is a huge Victorian on South Atlantic currently listed at $400,000 plus. BUt there are also lots of good homes in the sub-$200,000 range. Some of the smaller ones go for substantially less.

I might add that a lot of the people are young families with kids. Drive by the Friendship School some time on a Saturday. The playground is full. And these aren't exactly all Fricks and Mellons. Plenty of cops and teachers and the rest live here.

[Paul]

Sorry Johnathan but I lived in the city from 1977 until 2006 and am very well acquainted with it. I lived in Greenfield, Sq Hill, East End, Point Breeze and my family owned businesses in Bloomfield for many years.

The problem is that what the average Pittsburgh city resident considers to be middle class is quite different than what many from other parts of the country would consider it and there's a habit of mix and matching the terms middle class and middle income when ever convenient to an argument. I assure you that were you take someone from Dallas, Portland, Phoenix or a number of other cities put them in Bloomfield, Friendship, Southside, West Hills or Spring Garden and tell them those neighborhoods are middle class they would think you were certifiable.

I know it's all the rage these days for the urbanist to go into depressed neighborhoods, buy some run-down dump to rehabilitate it an then say "hey lookie here middle class" but those isolated pockets in no way change the overall living conditions of the neighborhoods. That the LUPs in Lawrenceville actually believe they'll be able to sell their properties someday instead of abandoning them like orginal occupants did years ago would be laughable were it not so sad.

As for Shadyside and Squirrel Hill; the 2000 census places the median household income at $28,588 and the American Community Surveys from the Census Bureau puts it at $31,779 for 2006 - that's $17,000 less than the national number. So how many households earning $31,770 do you think are living in those neighborhoods?

I never cease to be amazed in these discussions how many of the city's highest wage earners actually think of themselves as middle income and/or middle class and what a distorted view of those terms the average Pittsburgher has. The fact is a household in just about any city south of the Mason-Dixon line that earns "middle income" lives a much different lifestyle than a household earning a middle income in Pittsburgh. My household income is well above the median for the city and I spent years trying to find clean suitable housing in a safe neighborhood with decent schools and low crime in the city and it was an impossible task.

[Paul]

"I consider my neighborhood (Friendship/Bloomfield) pretty middle class. Sure, it has gentrified a bit, and there is a huge Victorian on South Atlantic currently listed at $400,000 plus. But there are also lots of good homes in the sub-$200,000 range. Some of the smaller ones go for substantially less."

And that's the problem; just because you consider it so doesn't make it so. Using standard mortgage issuing guidelines a household with a Pittsburgh middle income and ZERO debt is eligible for no more than a maximum of $124,000 mortgage. Add in a very nominal amount of additional debt (student loans, car payment etc) of $200 a month and the amount drops to $102,000. So unless they put themselves at risk with a sub-prime mortgage or have an unusually large down payment no middle income household are setting up in the "sub-$200,000" or anything close to it.

The number of properties available to a middle income household in Friendship - 2 a one bedroom place for $119,000 and 5 bedroom place in need of extensive rehabilitation for $79,000 sitting right at the intersections of one of the worst parts of Penn Ave - see for yourself.

http://www.howardhanna.com/property/proplist.asp?PRM_Minimum_Price=&PRM_MlsName=alleghenyhighlandspa%7Cwestpenn%7ChowardhannaPittsburgh&PRM_Maximum_Price=120000&VAR_propertycity=Friendship+Park&PRM_MLSNumber=&PRM_Address=&PRM_SchoolDistrict=

Money issues aside, the fact remains that Friendship is exactly the type of neighborhood I intially describe; pockets of nice homes owned by above middle income household that you need only walk a few blocks away from in any direction to find high crime, poverty striken, drug infested neighborhoods of East Liberty, Garfield and the seediest parts of Bloomfield.

If someone with kids wants to make some politcal point by trying to raise kids surrounded by that environment, more power to them. But anyone who thinks that it's a typical middle class lifestyle by most people's definition, well they're only kidding themselves.

I refer you back to the article linked in the original post where the writer describes her Dallas house as having being 1,000 square feet bigger than her LA home ... most of the homes in the neighborhoods your describing that any middle income family could afford barely have $1,000 square feet total let alone and additional 1,000 square feet.

It's almost tragic what city residents have come to accept as the definition of middle class living IMO.

[Paul]

Got a challenge for anyone who's up for it... repeat what I just did and report back what you find. Go to www.howardhanna.com and using the two numbers I came up with for mortage limits for median income households $124,000 (no debt) and $102,000 ($200 p/m debt) and do a home search for the entire Pittsburgh region. Start going through the more than 75 pages of hits and count the number that are located within the city limits.

It'll be fun.

[Sam M]

"It's almost tragic what city residents have come to accept as the definition of middle class living IMO."

I find little tragic in it.

I don't know how to prove that my neighborhood has a middle-class cohort other than to say that I know cops and teachers and mechanics who live here. Maybe you consider them to be aristocrats. But they live here.

Do they sacrifice certain things to live here? I suppose. Their homes might be smaller. Yards, too. Maybe they have less disposable income than other folks after paying the mortgage. But I hardly consider that decision "tragic." Maybe they are just willing to trade a few hundred square feet and a garage for the ability to walk to work. Or maybe they are drunks and they want to be able to walk to the bar. Maybe they grew up here and just like it.

In the end, I am not really sure where to locate this middle-class utopia you have in mind. Certainly nor Cranberry or Mt. Lebanon or anywhere like that.

And clearly, places like East Liberty have changed since you visited last. I was just at the library there this morning. I took my kids. Neither one got shot or stabbed or otherwise violated. We did drive past a Whole Foods and a Borders bookstore, though. I am not saying that makes the place some kind of yuppie paradise. But it certainly paints a different picture than the one you are offering.

I know grad students--grad students without trust funds--who have bought homes in Bloomfield and Morningside and East Liberty. Some are fixer-uppers. Some are smaller. Maybe they don't live the way you want to live. But they live.

I am not contesting the fact that there are advantages to living in the burbs, or that the city's tax and other problems create a caustic environment for middle-class families. But to say that it's impossible--or even exceedingly difficult--for a middle class family to live in Pittsburgh is simply wrong.

I live in the city. I am not sure how much you think composition teachers make. But let's just say I don't envision myself in a Porsche anytime soon. Or even a new Chevy.

[Jonathan Potts]

There is a question as to whether, as a matter of public policy, Pittsburgh is pursuing high-income residents. Clearly, this is the case, given the subsidizing housing, high-end housing developments throughout the city. I'm not in favor of this, nor am I in favor of subsidizing retail like what you describe in East Liberty.

I would add to Sam's eloquent response that I've never been shot or had to walk past any shooting galleries while walking my daughter to the library on Brookline Boulevard. Nor has anyone flashed a gang sign when we walked into the neighborhood bakery so that I could buy her a cookie and pick up a gallon of milk.

[Jeremiah]

Well I guess I'm the first to take Paul's challenge and I must say I'm pretty shocked at the result. I was expecting to be able to show him numerous example to prove him wrong but that wasn't the case at all. in the some 1,500 listing there and and going by the photos provided there were a couple houses in westview that needed a lot of fixing up a few shockingly ugly places that looked about ready to fall down on the south side larwenceville and in greenfield and not more than a handful of places scattered through out other city neighborhoods maybe one or two of which i would consider living in. there's no question that someone buying in that price range has far more choices of much higher quality homes if they buy outside the city. it's not even close really. I even tried to bump up the range a bit and more houses came up, but the ratio was even more lopsided in favor of the noncity houses. ross and scott have some pretty nice places in the 120 to 140 range lowering the ranged increased the number of places in the city and made me little depressed now I know what he meant by tragic. when the hell did this happen and the price get so whacked. i thought pittsburgh was not one of the overheated market.

[Paul]

"I don't know how to prove that my neighborhood has a middle-class cohort other than to say that I know cops and teachers and mechanics who live here. Maybe you consider them to be aristocrats. But they live here."

Well that seems to be one aspect of the problem... you don't have to look far to find numerous references to the fact that city of Pittsburgh teachers and police are amongst the highest paid in the country. The reality is that the average cop or teacher is earning nearly twice the median household income in the city. If they're married to a working spouse it's quite likely they're household income is at least three times what constitutes the earnings of a true middle income household in Pittsburgh.

You've assigned the label of middle class to groups of people that are in fact amongst the top 20% of the city wage earns... earning that in other regions would probably be close to middle income in other non-rust belt cities.

[Paul]

"Do they sacrifice certain things to live here? I suppose."

And I meant to remind you; city teachers, police and all public employes are required to live with in city limits. So their presence isn't really indicative of anything anyway.

[Paul]

"And clearly, places like East Liberty have changed since you visited last."

Seriously dude you seem to have conjured up all sorts of things to convince yourself I'm not speaking from personal experience. Last time I visited East Liberty was about 6 hours ago when I dropped my wife off at work like I've done every morning for the last 18 years. The last time I made the mistake of stopping was about two months ago when I decided to stop at the Home Depot there instead of waiting to get to the one is Ross - I was approached by a crack-head as I exited my car and gave me some obviously made up story to get money from me ... which perhaps I should have given him on second thought to keep my car from being broken into and emptied of all my quarters, CDs, sunglasses and umbrella.

It like you think I can't watch the local news and hear about the shootings at Peabody this past summer or something.

I think you're just in denial.

[Sam M]

I guess it comes down to different standards. I have been to the Home Depot a hundrd times. I have taken my kids there. I would do it again. I fear it not at all. Maybe that has something to do with our experiences. But I am telling you. I am not a crackhead. And I am not afraid of East Liberty in the least.

As for your middle-class families, I wonder: What do YOU consider middle class? What's the income level a person needs? Maybe my wife has a second job and is pumping a whole bunch of extra income into our account that I don't know about it. Or maybe she is hiding all the bills, or we have another credit card with $50,000 on it that I am unaware of.

But I am telling you, I make about $14,000 a year. (Check Pitt's website if you don't believe me.) My wife is a nurse, but she only works part-time. We have two kids.

And we live in the city.

We rent. But if I land a job teaching here when I am done with my degree... we are planning on staying pretty much where we are.

We struggle, yes. But that's what we choose to do. We are not on public assistance. I don't even participate in CHIP, although I think we might qualify.

Is this some kind of magic? Am I lying? Are my fellow grad students with homes in Morningside figments of my imagination?

I don't know how to respond to your notion that it is impossible for anyone other than rich people to live in the city, other than to point out that... um... lot's of people who are not rich--and are not crackheads--live in the city.

I am not sure why it is so important for you to think otherwise. Like I have said before, I think the city has been horribly mismanaged. I think all these redevelopment schemes are a crock of shit. I think one-party rule has nearly destroyed the city. In fact, I see all kinds of problems. But none of that makes me want to embrace claims that are clearly false.

If it were impossible for a young family that is not rich to live in the city, I would not live in the city.

Seriously. I mean it. How do you explain my existence? And the existence of scores of people I know in similar condition?

[Sam M]

Go here.

http://www.zipskinny.com/index.php?zip=15224

It's a bit dated, but only about 16 percent of the HOUSEHOLDS in my neighborhood make more than $50,000. Let's say the percentage has doubled. So... how do you explain the fact that still, less than half the households make 50 grand or more?

Or do you consider households making $50,000 to be part of some kind of aristocracy?

[Paul]

>As for your middle-class families, I wonder: What do YOU consider middle >class?

It depends on the context of the discussion. If you're using it to describe a solid, well maintained home with a bit more space than is just essential, a yard for the kids, a driveway and garage for a modestly priced car... something like that.

For the purposes of this discussion though it's about what kind of home a middle income can afford in different cities. The writer of the article talked about the difference in the homes that could be had in LA and Dallas and how many cities are watching their middle class disappear because home are simply out of the reach of so many middle income wage earners, while others aren't. And is what's exactly what I see happening in Pittsburgh - the city ... as fewer and fewer people earning a median wage here are able to find a suitable home they can afford.

We may disagree about what contitutes a suitable home, but I'm pretty confident that most people agree with me that they're not many to be found within their reach within the city limits and that's why the population trends are what they are.

I mean really anyone can argue the points if the wish but it's not a coincidence that you can find hundreds of nice houses in the areas surrounding the city in the 100 to 140 thousand range and those are the areas that are gaining in population while the city's declines.

You may think Bloomfield, Friendship, Spring Garden, Greenfield etc are nice places to live, but trust me most people don't and that's why several hundred thousand of them have chosen not to live their over the past few decades.

[Paul]

"Or do you consider households making $50,000 to be part of some kind of aristocracy?"

First of all 15224 encompasses parts of East Liberty and Bloomfield that contain public housing, and that's bound to drag the number down, so it's not really the neighborhood you're talking about so that's not an accurate measure of Frendship. Second while you use use words aristocracy of confuse the matter, that $50,000 is a pretty median number compared nationwide... the same number for the city at that time is $28,000...

So yeah they're not rich, but a household earning $50,000 is doing nearly twice as well as the median household in the city.

[Sam M]

Any sane measure of "middle class" would include households earning $50,000 a year.

And the fact of the matter is, less than half the households in my zip code make that amount of money.

"Any sane measure of "middle class" would include households earning $50,000 a year."

Exactly! Which means that Pittsburgh the city has a shockingly small, and shrinking, number of middle class households.

[Sam M]

But I don't get it. Now you are saying that $50,000 a year amounts to middle class.

Before, you said that middle-class families could not afford to live in the city.

But I am telling you--and offering proof--that MOST of the households in my neighborhood earn less than $50,000 a year.

So... if $50,000 a year DOES amount to middle class, your initial position does not hold. That is, my CITY neighborhood is full of middle-class people, as defined by household income.

This is not to argue that the world would not be a better place if more people made more that $50,000. Or that people have not bolted from the city in droves.

But you simply cannot argue that the City of Pittsburgh does not have a cohort of middle-class families. It does. I am one of them. And I know scores of others.

You previously argued that my neighborhood is too expensive for middle clas families because the houses cost too much.

Not true.

It's simply not true.

It is not the cheapest neighborhood in the region. And recent gentrification has clearly started to price more people out of the market. But I make $14,000 a year and I live here. My plumbing works. There are no rats or bullet holes. Each of our toddlers has his own bedroom. We have a washer-dryer and plenty of storage in the basement. We have a yard. And it's safe enough that my wife takes the kids for walks twice a day.

Did I mention that I make $14,000 a year? Trust fund? Ha. My dad is a mechanic. So was my wife's.

We are solidly middle-class in terms of heritage, income and ambitions. And we live in the city. In. The. City.

I do not view that as a badge of honor. Were I to land a full-time job here, I would consider all sorts of living arrangements, and do not have any kind of aesthetic or moral compunction against living in the burbs. But I would also consider the city. Which is something that would not be imaginable were I living in NYC, LA or DC. Not even close.

[Sam M]

But I don't get it. Now you are saying that $50,000 a year amounts to middle class.

Before, you said that middle-class families could not afford to live in the city.

But I am telling you--and offering proof--that MOST of the households in my neighborhood earn less than $50,000 a year.

So... if $50,000 a year DOES amount to middle class, your initial position does not hold. That is, my CITY neighborhood is full of middle-class people, as defined by household income.

This is not to argue that the world would not be a better place if more people made more that $50,000. Or that people have not bolted from the city in droves.

But you simply cannot argue that the City of Pittsburgh does not have a cohort of middle-class families. It does. I am one of them. And I know scores of others.

You previously argued that my neighborhood is too expensive for middle clas families because the houses cost too much.

Not true.

It's simply not true.

It is not the cheapest neighborhood in the region. And recent gentrification has clearly started to price more people out of the market. But I make $14,000 a year and I live here. My plumbing works. There are no rats or bullet holes. Each of our toddlers has his own bedroom. We have a washer-dryer and plenty of storage in the basement. We have a yard. And it's safe enough that my wife takes the kids for walks twice a day.

Did I mention that I make $14,000 a year? Trust fund? Ha. My dad is a mechanic. So was my wife's.

We are solidly middle-class in terms of heritage, income and ambitions. And we live in the city. In. The. City.

I do not view that as a badge of honor. Were I to land a full-time job here, I would consider all sorts of living arrangements, and do not have any kind of aesthetic or moral compunction against living in the burbs. But I would also consider the city. Which is something that would not be imaginable were I living in NYC, LA or DC. Not even close.

>But I don't get it. Now you are saying that $50,000 a year amounts to middle class.

Let's try this again as simply as I can...

The original question was - is Pittsburgh more like the LA, a city were the middle class household is all but gone due to high real estate prices, or Dallas where there's still housing available to people earning a middle class wage - as described by the author in a linked article.

I said: the answer depends to some degree on whether by Pittsburgh you mean the city proper or the metro area.

A $50,000 household income is by national standards a very middle income: the median is $48,000 and change... but as you correctly pointed out for your "neighborhood" the number of households earning $50,000 or more is about 16%, for the entire city about 20% and those are terribly small numbers.

Pittsburgh's middle class earns (the median household income) $28,000 in 2000 ($31,000est for 2006)

Yes might be right when you say a household earning $50,000 can afford a decent house in the city and what I'm telling you is that the fact is there are very few households in the city earning anywhere near that amount. A very large percentage of those that are earning $50,000 and up are city employees who are required to live in the city and part of the graying of the city's population having purchased their homes 20 or 30 years ago.

The problem is very clear... while you and I, most of the county and every national measure recognize $50,000 is a middle income - for the city of Pittsburgh it is nearly twice what the middle income actually is. When a household in Pittsburgh earning a Pittsburgh middle income ($28,000 to $31,000) goes to buy their first home today; under the best of normal circumstances they can obtain a mortgage for $124,000 or below - fact. The number of homes within the city that most families would consider acceptable that are $124,000 or less can be counted on your fingers. The National Association of Realtors puts together the Housing afford-ability index which measures what percentage of households earning a median income can purchase a median priced home using standard mortgage guidelines and the city of Pittsburgh does very poorly. The number of such homes outside the city numbers however is in the thousands - and that is one of the main reasons there are fewer of what constitutes a Pittsburgh middle income family in the city today than there were yesterday and there will be fewer tomorrow.

You can't seem to wrap you head around one simple fact - that a household earning $50,000 or more is NOT A MIDDLE INCOME IN PITTSBURGH. It is a household that is earning in the top 20% for the city.

Pittsburgh is a very poor, low wage city by national standards.

[Sam M]

"Let's try this again as simply as I can... The original question was..."

Uh... No. That might have been the original question. But it was not the question that we came to.

I don't know how or where you came to the conclusion that "middle class" equals "median income." Is that accepted anywhere by anyone? Good grief. That kind of ham-handed definition of "middle class" is preposterous. Pittsburgh has an incredibly high percentage of older citizens on fixed incomes. It also has a high concentration of the region's poorest people. OF COURSE "median income" is going to be sort of low.

Are you aware of other cities that use median income as the measure or definition of middle-class existence? Please point me to that.

In the meantime, here is a far more accepted version of the term from Wikipedia:

"The term often encompasses merchants and professionals, bureaucrats, and some farmers and skilled workers."

So. Can merchants and professionals and bureaucrats and skilled workers live in Pittsburgh? Of course they can. We know that. Because they do.

Furthermore, I have no idea where you are getting your data. Here are some that came out in the wake of the 2000 census:

"Allegheny County's median household income of $38,839 places it in the bottom fourth of the 216 biggest counties in the United States.

But the county ranks much higher when paychecks are set against the cost of housing, among the lowest in the nation's urban areas.

The typical home in Allegheny County was reported to be worth $82,090 last year, slightly more than twice the median household income.

"I believe people in western Pennsylvania are comfortable with the idea that housing is very affordable here," Strauss said.

Among most large U.S. counties, home values are typically triple annual household income.

Only 11 counties had relatively cheaper housing than Allegheny County when measured this way, including five in Texas. Philadelphia ranked 10th, with reported home values and incomes both lower than in Allegheny County.

On the other end of the scale, San Francisco's median home value of $427,938 was 7½ times the median income of $57,259."

I know these are largely county numbers. But the fact that fabulously wealthy San Fran is weighing in at $57,000 median income would seem to indicate that your projections for the rest of the country are a bit off.

I don't know how else to say it, so I will repeat it. I make $14,000 a year and I live in the city. My wife works part time to make up the difference. We are not rich. Tons of people make more than we do every year. Tons of them are free of the student loans and other debts my wife and I pay. And still, miraculously, we live in the city. In a nice place with a yard and a garage.

How do you explain that?

[Sam M]

MHI for the US is at about $48,000, BTW. I'll check around for median home price...